Cowen laying the ground for further cuts

AS WITH many things these days, the Government was damned if it did and damned if it didn't when it came to whether to publish…

AS WITH many things these days, the Government was damned if it did and damned if it didn't when it came to whether to publish the economic framework plan and whether to publish it before or after Christmas, writes Noel Whelan.

There was some resistance within Government to the publication of such a document, in part because it would inevitably attract criticism as vague or a mere repackaging of existing initiatives.

However, the Taoiseach saw the need to publish such a framework to remind the public that the Government has already put in place a massive stimulus package in the form of the capital and infrastructure projects in the National Development Plan and to emphasise that work is being done to improve our competitiveness and to position us to exploit an international recovery whenever that comes.

The document launched by the Government this week was not a detailed projection of or prescription for Ireland's medium-term development. It couldn't be given the uncertainty in which our economy operates.

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We are in the middle of a perfect financial and economic storm. The best we can hope to do is hold our current position and avoid getting into further difficulty. It is naive to suggest that we can chart a definitive course at this stage.

The primary purpose of the publication at this point, before Christmas, was to lay some ground for the more negative elements of the economic strategy which will prevail in January, especially the announcement of a series of further public spending cuts.

As well as taking a few days badly needed rest over Christmas, the Taoiseach, his Ministers, officials and advisers will be absorbed in three main tasks in coming weeks.

First, they will have to sweat the detail on a bank recapitalisation programme. It will be a complex task to design the appropriate mix and form of private and public investment necessary to deal with the banks' capital problem. Recent revelations about Anglo Irish Bank will not make that any easier. Secondly, Cowen and his team will have to engage more deeply with the leaders of the public sector unions.

From early new year they will be busy seeking to persuade the social partners to accept a number of cost-cutting initiatives which the Government has already devised. It is easy for Opposition politicians and commentators to call for a dramatic cut in public sector wages but such a cut would affect hundreds of thousands of households and, if mishandled, could cause wholesale industrial unrest in the public service.

The Government can't just talk about pay cuts; it has to be careful about how it seeks to effect them. For better or worse the Taoiseach has decided that the achievement of further public spending cuts will be managed within social partnership. He is taking the more difficult but ultimately more durable route of seeking consensus. If the social partners engage meaningfully then his approach will be vindicated.

Thirdly, the Taoiseach with his Fianna Fáil Ministers and political advisers must find some downtime from the economy to address their own political situation.

Fianna Fáil in Government has to design a framework for its political recovery, not as an end in itself but as a means of ensuring public support for the difficult decisions they must make. While recent weeks saw improvements, there are still substantial gaps in this Government's communications and political management.

Interviews around the launch of the economic document generated opportunities for both Cowen and Brian Lenihan to communicate to the public in more detail their assessment of the economic situation and its consequences.

However, there are not enough Government voices able to competently carry the burden of presenting the Government's economic case. A clearer narrative about why the Government is making certain decisions is also required.

Fianna Fáil must also have regard to the imminent electoral battles it faces in the short term, namely, the Dublin South byelection, European Parliament elections and local elections.